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Coronavirus Concerns for 401(k) Plan Providers.
What you need to know..
 Being a retirement plan provider isn't easy. The fees seem to be getting smaller and the work seems to becoming more and more. The latest curveball is the Coronavirus (COVID-19) pandemic. What sets a minor leaguer from a major leaguer is learning to know how to hit the curveball. This article is all about how you need to hit this curveball of Coronavirus if you want to remain and thrive when things come back to normal.
To read the article, please click here.
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The Coronavirus Distribution isn't good for participants and the business.
Leakage isn't good.
As the turd in the punch bowl as I affectionately call myself, I am a little too frank on what is going on in the 401(k) industry.
The Coronavirus pandemic is something that hasn't been seen in this country, probably since World War II. Right now, we don't know how many people will lose their jobs or be furloughed during this time. While I'm glad that distributions to participants negatively impacted by Coronavirus won't get the early distribution penalty (for those under 59 ½), the inevitable leakage for retirement plans isn't good for participants and for plan providers.
Plan participants will lose out because they will invade their retirement savings for money they need today and they will do so after the market has gone down from 25-40% (depending on when they get their distribution).
The 401(k) industry is going to get hurt by this because it's a business dependent on plan asset size and leakage through hardship distributions and termination distributions will negatively impact the amount of fees that many providers take.
This is the reality we live in. People negatively impacted by this pandemic need relief, but many in the 401(k) industry will pay a price for it with reduced fees because of a market downturn and leakage through distributions. Participants who need the money now, aren't going to doing better.
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Fidelity fends off one FundsNetwork claim.
Nothing has changed.
 Fidelity has been under fire for its FundsNetwork 401(k) offering. The FundsNetwork is where various mutual funds, affiliates of mutual funds, mutual fund advisors, sub-advisors, investment funds, including collective trusts, and other investment advisors, instruments or vehicles that are offered to the plans through Fidelity's FundsNetwork pay Fidelity to be a part of the fund lineup.
A class-action lawsuit by a participant of T-Mobile's 401(k) plan claimed the payments were "secret payments to Fidelity for its own benefit in the guise of 'infrastructure' payments or so-called relationship-level fees" in violation of ERISA's prohibited transaction rules." Fidelity isn't the only bundled provider with this type of fund lineup where fund companies make payments to be a part of the network.
The case was thrown out because Fidelity wasn't a fiduciary and there was no proof that these "shelf-space payments" increase participants' costs. Shelf space payments aren't OK with me, but it is a giant loophole through the fee disclosure rules because there is no nexus between these payments and costs charged directly or indirectly by any plan provider to the plan.
Shelf-space payments will continue to exist as long as the Department of Labor doesn't close the loophole that allows it.
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Size matters.
 I am a proponent of multiple employer plans (MEPs) and the new change that will allow pooled employer plans (PEPs) that will be what we called an Open MEP in 2021. As discussed in other posts, the PEP change doesn't change what trouble most MEPs, the struggle to grow assets and achieve that promised cost savings.
I've talked to plan providers that are very skeptical about PEPs, especially as it pertains to asset size and cost savings. While I don't think any third-party administrator (TPA) should forget about PEPs or focus only on them, I think they can be a good opportunity for the micro plan market. My concern is that if as plan providers that we don't embrace PEPs, one of the larger bundled providers will and cut a lot of us out of some serious business. If a plan provider targets the PEP as a turn-key solution and has a good distribution system, the concern is that they will cannibalize the small plans of every smaller plan provider out there.
Give me a call and we can talk about what we can do about PEPs, would love your insight as a plan provider because you just got mine.
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You can't go negative.
It's not a good idea.
 Growing up, I was a pessimist. I don't why, but I let any little thing get to me and I realized that being negative, scares people away.
That's why I recommend when dealing with potential clients, don't harp on the negative that you see with the plan. Always come from a positive view and how your services could go a long way in improving their plan. Plan decisionmakers have egos and no one wants it rubbed in their face that made poor decisions even it was clear that they made poor decisions.
Years ago, a certain third-party administrator (TPA) was going through a very public crisis and every other advisor and TPA out there were making phone calls to this TPA's clients and al;l they did was sprouting negativity about this TPA. I can't imagine that these providers got many clients that way because selling is all about what you can do for the client, not how badly the current plan provider is doing. You need to differentiate yourself from the incumbent provider, but it has to come from a positive standpoint.
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Introducing That 401(k) Virtual Conference.
Registration for Minnesota is open.
 Thanks to Coronavirus, our Houston and St. Louis events will have to be rescheduled. Will post new dates when Major League Baseball announces a start date for the season.
We know that while many of you are working from home, many of you crave content to help your practice and so many national events have to be cancelled.
So we've decided to take what we have done with the National and Regional events with an online virtual event that is free of charge. Just no lunch, stadium tour, and athlete appearances.
Please join me for the first That 401(k) Virtual Conference on Friday, April 17th at 11am EST. Recordings of the webinar will be available on demand afterwards. Both the live and recorded events will be free.
Presentations will include a presentation on Coronavirus issues by me, as well as presentations on plan audits, automatic rollovers, and many other important topics to be announced.
To sign up, please click
here. A tentative agenda can be found
here.
To sponsor the event and speak to plan attendees for 30 minutes, please contact
me. I promise the rate is cheap.
 That 401(k) Conference is the most fun 401(k) advisor out there with a price point that won't break your back.
$100 gets you 4 ho
urs of content to grow your advisory business, lunch, a stadium tour and a meet and greet with a sports legend. 
Minneapolis has also been booked for June 5th. Click
here
for sponsorship information. Registration is
here
. We will have tickets available for the game that night vs.
the
Angels.
For December, we will be headed to Sin City at Las Vegas Ballpark in Suburban Vegas (20 minutes from the Strip). It will be on Friday, December 4th. Sponsorship information can be found here.
Further information on other events for 2020 will be made available when booked.
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The Rosenbaum Law Firm Advisors Advantage, April 2020
Vol. 11 No. 4
The Rosenbaum Law Firm P.C.
734 Franklin Avenue, Suite 302
Garden City, New York 11530
516-594-1557
Fax 516-368-3780
Attorney Advertising. Prior results do not guarantee similar results. Copyright 2019, The Rosenbaum Law Firm P.C. All rights reserved.
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